🖤 Donations of all sizes power our public service journalism Give Now

Check out anytime you like — and leave

John Dimsdale Dec 15, 2006

KAI RYSSDAL: There are some good things about doing business in the United States: plenty of capitol and eager consumers. But still, some foreign companies are welcoming a gift from U.S. securities regulators this week. The SEC has floated new rules making it easier for companies based overseas to de-list from stock exchanges here. From Washington, Marketplace’S John Dimsdale explains why foreigners are so eager to take their stock listings elsewhere.

JOHN DIMSDALE: International companies complain that once they’re listed on a U.S. stock exchange, they can never get out. As the rules are now, any foreign company with just a few U.S. shareholders can never escape the SEC’s reporting requirements once it’s registered with markets here. The European Commission’s Crispin Weymouth says it’s time to change the rules.

CRISPIN WEYMOUTH: We just like the option of deciding whether to get out or not, rather than being sort of trapped in this sort of Hotel California situation where once you’re in, it’s very difficult to leave.

Ever since the tough Sarbanes-Oxley reporting requirements, the number of foreign company public offerings here has plummeted. Business consultant Everett Ehrlich says American stock exchanges have had to become more accommodating.

EVERETT EHRLICH: The response of the exchange by making it possible to de-list with minimal effort and cost is to say, “You can take a chance on us and we’re so confident in what we offer you that you can walk away from it if it doesn’t satisfy you.

Will there be a rush to the exits by foreign companies? Crispin Weymouth says no.

WEYMOUTH: The easier you make it to exit, the more will be willing to come in in the first place because they will feel they’re not being trapped there.

The proposed new rule should be final by spring. In Washington, I’m John Dimsdale for Marketplace.

There’s a lot happening in the world.  Through it all, Marketplace is here for you. 

You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible. 

Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.